In that case the replacement effect is somewhat less efficient, point it still operates in the same direction. The general case is
Figure 3 in which the X axis represents "general-capital," i.e., tal plus human capital. We assume that human capital is the int component and the major productive element in general-•ays from the origin represent constant ratios of labor and gen-id they result in a constant income level per worker. If L0 is the
LQ Lj L2 LS
Labor force
Figure 3. Growth of labor force and general capital.
nt of labor and Y0 is the initial income per worker, then the :row shows the consequences of labor force growth under the mptions and constant returns to scale. If education per person is 3nt variable and a greater number of people implies a higher level per worker on the average, then the path of labor force growth the curved line marked P. The tangent of this path with one of rays yields the optimum growth of the labor force for the period, ly be seen that if actual labor force growth falls short of the bor growth, then the analysis implies the desirability of an in-5 rate of population growth. The figure illustrates the possibilityt we can weaken some of our assumptions without altering the general point made. For example, assume that beyond some point there are diminishing returns to education at